Citing “people familiar with the matter”, the Wall Street Journal revealed last week that the two companies have been discussing a cash-and-stock deal in which GateHouse’s parent, New Media Investment Group, would likely buy Gannett.
The Journal’s sources said a deal could be announced within weeks, assuming the talks don’t break down, and that Mike Reed, chairman and CEO of GateHouse, would assume the same roles at the combined entity.
GateHouse, which is ultimately controlled by Fortress Investment Group – itself owned by Japanese tech giant SoftBank – is the largest newspaper publisher in the US with 156 daily newspapers and 464 community publications across 39 states.
Meanwhile, in addition to USA Today, Gannett owns about 110 newspapers across the country, including large regional titles, such as the Indianapolis Star and Milwaukee Journal Sentinel.
If Gannett’s board approves the deal, it is thought the merged company could make significant cost savings of up to £200m a year. It would also provide Gannett with more opportunities to sell digital advertising via its USA Today network.
Commenting on the development, analyst Chuck DelGrande told USA Today that both companies “have grown and succeeded, even in the challenging macro environment for newspapers in the digital age, by continuing to be relevant in local news, an area where readership remains viable.”
He also observed that GateHouse’s links to SoftBank pointed to the possibility of capital being made available for the merged company to develop into a digital powerhouse.
This is an important consideration for newspapers in the digital age, especially as it is estimated that more than 1,800 have been forced to shut in the US over the past 15 years.
Sourced from Wall Street Journal; additional content by WARC staff